The WIP A Surety’s Deep Dive David Pesce, CCIFP Director of Surety AXIS Insurance 300 Connell Dr., Suite 8000 Berkeley Heights, NJ

 Review of the Basics  Financial Statement Tie Back  Trend Analysis  Real Examples of what the WIP can do to bonding

 Only applicable to jobs with Overbillings ◦ Billings in excess of Costs, not B/C+EE  The amount beyond your total profit you have billed in advance ◦ At some time this will have to be “repaid”  Calculation ◦ Calculate Billings to Date – Cost to Date (B/C) ◦ B/C – Total Est. Profit = Pure Job Borrow

 A WIP Must Tie Back to the Financials ◦ For CPA statements, this is “as must”  Supplemental information  Exclusion of these schedules will affect bonding ◦ For internal information it is still important  Indicative of the quality of the information  Completed Contract information just as important as the Work in Progress

WIP - A Surety's Deep Dive Tie Back to Financials

Current Year Activity Ties back to Schedule 1 Prior Year ActivityTotal Contract Activity WIP - A Surety's Deep Dive Tie Back to Financials

Current Year Activity Ties back to Schedule 1 WIP - A Surety's Deep Dive Tie Back to Financials

Ties back to Schedule 1 WIP - A Surety's Deep Dive Tie Back to Financials

Overbillings Underbillings WIP - A Surety's Deep Dive Tie Back to Financials

 All WIP’s and Completed Contract Schedules are entered and tracked  Underwriter will look for discernible trends ◦ In individual jobs ◦ Also over many jobs and many periods  Trends can and will change an Underwriter’s view of an account ◦ Both positively and negatively

WIP - A Surety's Deep Dive Trend Analysis

 Used when no financials are provided  Must have items to calculate ◦ Open Jobs ◦ Completed Projects  Estimates are used when not provided ◦ Prior FYE Open Jobs  Estimates are used when information is not provided

David Pesce, CCIFP Director of Surety AXIS Insurance 300 Connell Dr., Suite 8000 Berkeley Heights, NJ Questions??